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Digital Gold


Cryptocurrency is a type of digital money that is intended to be secure and, in many cases, anonymous. It is a currency associated with the internet that uses cryptography, the process of converting legible information into a practically uncrackable code, to track purchases and transactions. Today we are using this level of security to also transfer value within a secure format. Cryptography was born out of the requirement for secure communication in the Second World War. It has advanced in the digital era with elements of mathematical theory and software engineering to become a way to secure interchanges, information and money transfers online.

The first cryptocurrency with public appeal was bitcoin, which appeared in 2009 and the best known. There has been an increasing amount of cryptocurrencies offered in the last decade and there are now more than 1000 accessible on the internet. One would wonder, why are there so many and what makes them different?

Let's first explore...

How do cryptocurrencies work?

Cryptocurrencies use decentralized or distributed technology to let users make secure transactions and store money without the need to use their name or go through a bank. They run on a distributed public ledger called block chain. The Blockchain is a record of all transactions updated and held by currency holders.

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated calculations that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets. Cryptocurrencies and applications of block chain technology are still nascent in financial terms and more uses should be expected. Transactions including bonds, stocks and other financial assets are being developed and tested with the oversight of the SEC (security exchange) in the US for compliance concerns.

What are the most common cryptocurrencies?

Bitcoin: Bitcoin was the first and is the most commonly traded cryptocurrency to date. The currency was developed by Satoshi Nakamoto in 2009, a mysterious figure who developed its block chain. The actual whitepaper (first of it's kind) was published in October 2008 and the genesis block for the bitcoin blockchain was created in January 2009. It has the highest market capitalization of any cryptocurrency. Yet, it's functionality is limited to payments mostly. Yet, bitcoin captures about 40% of the total cryptocurrency market. That equates to about $145 billion as of May 2018

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Ethereum: Developed in 2015, Ethereum is the currency token used in the ethereum block chain, the second most popular and valuable cryptocurrency. Ethereum has a market capitalization of around $71bn as of May 2018. However, ethereum has had a turbulent journey. After a major hack in 2016 it split into two currencies, and now 2 years later it is the strongest of the top cryptocurrencies by offering it's smart contract technology to the up and coming projects. It is trading over $700 today. It briefly was trading as low as 10 cents.

Ripple: Ripple is another distributed ledger system that was founded in 2012. Based on the blockchain technology, Ripple has a similar system and can be used to track more kinds of transactions, not just of cryptocurrency. It has been used by banks including Santander and UBS and has a market capitalization of around $27 billion.

Bitcoin Cash: Is sitting in the number 4 spot on Coinmarket Cap as of today and trading at $1200. It's market capitalization is $21 billion. (more about coins later)

EOS: This token is sitting in the number 5 place on Coinmarket Cap as of today and trading at $14. It's market capitalization is $12 billion. (more about tokens later)

Litecoin: This currency is most similar in form to bitcoin, but has moved more quickly to develop new innovations, including faster payments and processes to allow many more transactions. Just recently is announced the Lightning Network that is a lot faster for transactions than bitcoin. The total value of Litecoin is around $7 billion.

Why would you use a cryptocurrency?

Cryptocurrencies are known for being secure and providing a level of anonymity. Transactions in them cannot be faked or reversed and there tends to be lower fees, making it more reliable than conventional currency. Their decentralized nature means they are available to everyone, where banks can be only in larger cities or regions in a country. Being exclusive in who they will allow to open accounts.

As a new form of currency, the cryptocurrency markets have been known to effectively "take off" meaning a small investment can bring large sums within a short period of time. This is the gold rush affect.

But the same works the other way. People look to invest in cryptocurrencies should be aware of the volatility of the market and the risks they take when investing. Because of the level of anonymity they offer, cryptocurrencies are often associated with illegal activity, particularly on the dark web. This is not the majority of the cases yet, it is founded in reality. Doing your due research on any blockchain or cryptocurrency you are interested in before buying or investing. There are many ways to benefit from this digital age. Trading, mining and buying at the early stage are all possible and can put you on course to be wealthy beyond your dreams...as long as you select the right ones and understand the volatility of the markets. Users should be careful and ask questions when choosing to buy the currencies.

Safest thing you can do is invest in yourself. Get educated on the blockchain and cryptocurrency revolution. It's the right time.

For more details on this topic you can visit my group - http://www.facebook.com/groups/ecoinera

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